This Module focuses on the stockholders’ equity section of the balance sheet. It begins by discussing how a corporation is formed along with the definitions of the articles of incorporation, capital stock, and the corporate charter. In addition, the two classes of stock, common and preferred, are defined. Next, the chapter covers the treatment of cash dividends. This is followed by a discussion about accounting for stock dividends and stock splits. Then, the definitions of treasury stock, listing the benefits of purchasing treasury stock, and a discussion on treasury stock basics are covered. Finally, the reporting of stockholders' equity on the balance sheet is discussed.